Ashford Reaches $437M in Asset Sales, 2008 Goal is $600M

By Michael Fickes, Contributing Correspondent

-- With $148.2 million in asset sales for the third quarter, Dallas-based Ashford Hospitality Trust Inc. brought sales for the year to $437 million. The company plans to dispose of assets valued at approximately $600 million during 2008, through outright sales and joint ventures. Last year, the company sold 21 assets for $312 million.

The $437 million total covers the sale of 10 properties and represents a price of approximately $133,000 per key, a 6.6 percent 12-month NOI cap rate and a 12.0x trailing 12-month EBITDA multiple.

In a prepared statement about AHT’s asset sales strategy, president & CEO Monty Bennett said that funds from the dispositions are recycled into stock repurchases, capital preservation vehicles and debt payments. The third quarter sales, for example, paid off $112 million in mortgage debt.

The AHT report accompanies a significant downturn in the hospitality industry. According to the FTSE NAREIT US Real Estate Index, stock prices for resort and hospitality REITs plummeted 43.96 percent between Oct. 1 and Oct. 27. For the year, the index shows a decline of 58.94 percent in the hospitality sector.

On Oct. 8, Robert W. Baird downgraded 12 hotel REITs, while cautioning investors that RevPAR (revenue per available room) would likely decline between 3 and 5 percent next year because of decreased demand and increased supply. The downgrade moved AHT from “outperform” to “neutral,” citing risks posed by “substantial floating rate debt and higher leverage.”

AHT owns or has ownership interest in 104 hotels and holds mortgages on nine hotels. The portfolio is mostly upper-upscale and upscale hotels, plus a handful of luxury, mid-scale and independent hotels. Investment strategies include direct investment, first mortgage loans, mezzanine lending, sale-leaseback transactions and stock buybacks. The company hedges its risks with a diversification program that includes chain scale, brand and geographic components. Since going public in August of 2003, AHT has sold assets valued at $892 million.

Homepage Story Here

Chartwell Completes Acquisition of Remaining JV Interests in Quebec Property Manager, Properties

By Tom Dworetzky, News Editor

-- Chartwell Seniors Housing Real Estate Investment Trust and Groupe Melior has announced that Chartwell has completed the acquisition of the remaining 50 percent interest owned by Residences Melior (an affiliate of Groupe Melior) in seven retirement properties in the Province of Quebec, as well as Melior's 50 percent interest in the joint venture property management company managing all of Chartwell's senior housing communities in Quebec.

 Under the terms of an agreement with Melior, Chartwell paid approximately $63.3 million for the 50 percent interest in the seven properties and the management company. The price was determined by independent appraisers. The closing was funded with cash on hand of approximately $14 million, with the remainder of the purchase price being satisfied by the assumption of mortgages of approximately $46.1 million, bearing a weighted average interest rate of 4.8% and having a remaining term of 2.75 years, the assumption of other liabilities of approximately $0.5 million, and the discharge of approximately $2.7 million of mezzanine loans issued by Chartwell.

 The seven communities in which Chartwell purchased the 50% interest that it did not already own are as follows: Monastere d'Aylmer in Aylmer containing 272 suites, Notre Dame de Hull in Hull containing 225 suites, Marquis de Tracy I in Sorel containing 123 suites, Marquis de Tracy II in Sorel containing 138 suites, Domaine du Chateau de Bordeaux in Quebec City containing 150 suites, Residence Principale in Cowansville containing 197 suites, Residence St-Pierre in Rouyn-Noranda containing 121 suites.

 In addition, Chartwell announced today that internal growth projects on three of Chartwell's properties in Quebec are completed with the new space now in lease-up. Residence Ste-Marthe in St. Hyacinthe, Manoir Pierrefonds in Montreal, and Maison Herron in Dorval have added an aggregate of 278 suites to the portfolio, and Chartwell is in the process of marketing these new suites in each of their strong markets.

Homepage Story Here

Guardian Nabs 111,000-SF Suburban D.C. Office for $55M

By Barbra Murray, Contributing Editor

-- Ownership of Quincy Crossing, a fully-leased 110,900-square-foot office building in Arlington, Va., less than five miles across the Potomac River from the White House in Washington, D.C., has changed hands. Normandy Real Estate Partners sold the Class A property to Guardian Life Insurance Co. in a transaction valued at $55.5 million.

The deal marks a short-term hold for Normandy. The company came into possession of Quincy Crossing with the $538 million acquisition of a group of 13 office properties from Morgan Stanley Real Estate in late 2006. Morgan Stanley sold the 2.4 million-square-foot East Coast portfolio to Normandy immediately after the closing of its $1.9 billion purchase of Glenborough Realty Trust.

Carrying the address of 801 N. Quincy St., Quincy Crossing sits two blocks from a metro station and just across from the proposed future headquarters of the Defense Advance Research Projects Agency in Arlington's Rosslyn-Ballston Corridor. The building was developed in 2002 and, in addition to parking, includes a parking facility, as well as ground-level retail space presently accommodating to restaurants.

The U.S. Department of the Interior serves as the property's anchor tenant, occupying approximately 39,100 square feet under a lease that is scheduled to expire at the end of January 2012. Other names on the 12-tenant roster include Everest College, the American Association of School Administrators Inc., American Waterways Operators and Applied Research Associates Inc. According to Cassidy & Pinkard Colliers, which marketed the property on behalf of the seller, in-place rents are between 5 and 12 percent below market rents, and all leases are scheduled to expire by 2014. The average asking rate for Class A office space in the Rosslyn-Ballston Corridor is $40.28 per square-foot, as per a third quarter, report by real estate services firm Grubb & Ellis Co.

Despite the challenging lending market, Quincy Crossing attracted a great deal of attention among hopeful investors. "At the end of the day, there were multiple groups at similar pricing," Jud Ryan, vice president with Cassidy & Pinkard, told CPN. Ryan, along with colleagues James Cassidy, Bill Collins, Paul Collins and Drew Flood, worked on the transaction. "The fundamentals remain strong in the Rosslyn-Ballston Corridor; most people view it as an extension of Downtown Washington, D.C. As for the building, there is a lot of future upside because DARPA is likely to move its headquarters across the street, and that will probably generate even more demand."

While Normandy is no longer the owner of Quincy Crossing, it will maintain an association with the building as property manager.

Headquartered in Morristown, N.J., Normandy is a privately owned, fully integrated real estate and investment management concern. The company owns a portfolio of commercial, residential and hotel properties across the Boston-Washington, D.C. corridor.

Homepage Story Here

Mexican Real Estate Market Continues to Thrive

By Barbra Murray, Contributing Editor

-- The real estate market in the U.S. is taking a bit of a beating due to the financial crisis, but the property market in neighboring Mexico appears to be escaping any negative consequential effects, according to a Global In-Sights webcast by CB Richard Ellis Inc. Bolstered by solid economic fundamentals, $75 billion in Central Bank reserves and the absence of a housing crisis, Mexico has been able to maintain a strong real estate market.  

The office and industrial sectors continue to perform well in major metropolitan areas in Mexico. In such leading office markets as Mexico City, the overall average vacancy rate is 6.6 percent, and the average vacancy rate for Class A space, in particular, is 4.09 percent. Demand for office space in the city has led to the conversion of industrial sites outside of the Central Business District. Additionally, businesses are developing their own sites. It's not just Mexico City that is faring well; Monterrey, for example, has a 5.25 percent Class A office vacancy rate. As for investors, they continue to be attracted to Mexico, drawn in by minimal risk and low equity cost.

In the industrial sector, the overall average industrial vacancy rate in Mexico City is just 6.2 percent. Industrial and logistics properties are highly coveted, due in no small part to increasing oil prices, which, in certain logistical scenarios, have prompted manufacturers to forego China for Mexico. And as the Mexican government invests further in infrastructure, the industrial market is expected to experience even greater demand.

Indeed, as per the Global In-Sights webcast, with the investment community seeking global diversification, a bevy of commercial real estate sectors in Mexico--not just office and industrial, but retail and hotel, as well--have grown increasingly active. Examples abound. Early this month, news emerged that ING Clarion partners and Silicon Border Development had worked out the final details of a joint venture and financing plans for the development of the 10,000-acre Silicon Border Science Park in Baja California, Mexico.

In August, ProLogis, the largest provider of distribution facilities in the world, announced the expansion of its presence in the country with the commencement of the first phase of ProLogis Park Centro Industrial Juarez in Ciudad Juarez, a facility that will encompass 3 million square feet of industrial warehouse space at full build-out.

Mid-year, Prudential Real Estate Investors formed a joint venture with Grupo Concord to develop the second phase of the CostaBaja Resort & Marina outside of La Paz, Baja California Sur; Prudential plans to invest as much as $800 million in the project over a period of several years.

And in April, the Ritz Carlton Hotel Co. revealed plans with resort developer Ernesto Coppel for the Ritz-Carlton Los Cabos Quivira, a 200-room hotel property with 200 ultra upscale residences in Los Cabos.

Homepage Story Here

SL Green Reports Strong 3Q Results Amid Restructuring at Gramercy Affiliate

By Gail Kalinoski, Contributing Editor

-- One day after announcing third-quarter results with a 16 percent increase in FFO due to strong leasing in Manhattan, SL Green Realty Corp. has announced four lease transactions totaling more than 170,000 square feet, apparently signaling that tenant demand for quality Manhattan space has not yet diminished.

“Despite uncertainty about the New York office market, we continue to experience tenant demand for well-located, quality buildings that provide attractive rental value,” Steven Durels, SL Green’s executive vice president & director of leasing and real property, said in a release. “Additionally, these transactions continue to unlock the rent growth embedded in our portfolio.”

SL Green, a New York City-based office REIT, said the new rents averaged 72 percent above previously escalated rents on a per square foot basis.

In the biggest of the four leases announced Tuesday, Wurk Environments L.L.C., signed a new 10-year lease for 64,800 square feet at 1515 Broadway in Times Square, which is currently being renovated. The firm is taking the previously vacant 11th and 12 floors in the 54-story building, increasing occupancy to 97 percent. Adam Rappaport of Cushman & Wakefield Inc. represented the tenant. SL Green was represented in-house by David Kauffman along with Frank Doyle, Cynthia Wasserberger, Edward DiTolla and David Kleiner of Jones Lang LaSalle.

News America Inc., an affiliate of News Corp., expanded its space at 1185 Avenue of the Americas by taking floors 22 and 23, which were expected to become vacant next year. With this 12-year lease for 54,500 square feet, the company now rents 138,300 square feet in the building, bringing it up to full occupancy. David Levinson and David Berkey of L&L Holding Co. represented News America, while SL Green was represented in-house by Howard Tenenbaum and Gary Rosen.

Two leases were signed for a total of 51,900 square feet at 750 Third Avenue. Eisner L.L.P. took an additional 34,000 square feet for eight years, bringing its occupancy there to 106,900 square feet. Henry Krausman of Colliers ABR represented the tenant while David Turino handled the transaction in-house for SL Green. Also at 750 Third Avenue, the Republic of Poland took a new 15-year lease for 17,900 square feet on the entire 30th floor and part of the 29th floor for the country’s Permanent Mission to the United Nations. Turino represented SL Green, while Ronald Shakerdge of Republic Realty Services Inc. represented the Mission.

SL Green also announced Tuesday that Merrill Lynch extended its 30,500-square-foot lease at 360 Hamilton, a Class A building in the White Plains, N.Y., CBD for another 10 years. The 14-story building in Westchester County, part of SL Green’s suburban holdings, is now 100 percent occupied. Paul Kauffman of Cushman & Wakefield represented Merrill Lynch and John Barnes and Clark Briffel handled the deal in-house for SL Green.

Strong leasing highlighted third-quarter results for the REIT, which were released Monday. The REIT said it had signed 52 leases in Manhattan totaling 373,400 square feet, of which 39 leases and 359,000 square feet was for office space. The average starting rent was $66.78 and occupancy at the end of the third quarter, Sept. 30, was 96.5 percent, down slightly from 96.7 percent on June 30. The company said Manhattan office rents increased by an average of 55 percent on leases signed in the third quarter over previously fully escalated rents, “reflecting strong embedded growth in the Manhattan office portfolio.”

In the New York City suburbs, SL Green signed 20 leases during the third quarter, totaling 77,000 square feet of space, most of it for office buildings. Occupancy for the suburban portfolio remained relatively stable, going from 91.8 percent to 91.9 percent by the end of Q3. Average starting suburban rents were $38.48 per square foot.

The company said leases were signed during the third quarter at several Manhattan buildings, including 100 Park Avenue, 461 Fifth Avenue, 711 Third Avenue, 420 Lexington Avenue and 750 Third Avenue as well as at 750 Washington Boulevard in Stamford, Conn.

SL Green reported fund from operations available to stockholders (FFO) was $88 million, or $1.45 per share (diluted) for the third quarter ended Sept. 30, up 16 percent from the same quarter of 2007. For the nine months ended Sept. 30, the company reported FFO of $4.89 per share (diluted), a 7.7 percent increased compared to the first nine months of 2007.

Net income available to common stockholders for the third quarter totaled $33.6 million, or 58 cents per share, compared with $98.6 million, or $1.64 per share, at the same time last year. Revenue was $268.7 million, up 9.6 percent, beating Wall Street estimates by about 20 million, according to an Associated Press story Tuesday. AP also reported that analysts polled by Thomson Reuters had expected the third-quarter FFO to be $1.39 per share.

All the strong SL Green results comes amid a shakeup at affiliate, Gramercy Capital Corp., which SL Green formed in April 2004 as a specialty finance company focused on originating and acquiring loans and other fixed-income investments secured by commercial real estate. Gramercy Capital, a separate public company, has seen its stock plummet at least 97 percent since the beginning of the year. SL Green is Gramercy’s largest stockholder. As of Sept. 30, the book value of SL Green’s investment in Gramercy was $141.5 million, according to the third-quarter financial results.

As reported earlier Tuesday by CPN, Roger Cozzi has been hired as president & CEO, immediately replacing Marc Holliday, who had held both posts since the company’s inception four years ago. Holliday will continue as SL Green’s president & CEO. Also stepping down at Gramercy are Chief Investment Officer Andrew Mathias and Chief Credit Officer Gregory Hughes. Holliday and Mathias will remain as consultants through September 30, 2009.

Cozzi was most recently managing director at Fortress Investment Group L.L.C. He also served in senior roles at iStar Financial Inc from 1998 to 2007 and has previous experience at Starwood Mezzanine Investors and Starwood Opportunity Fund IV as an investment officer, as well as three years at Goldman Sachs.

“The board is confident that Roger is the right person to tackle the significant challenges that the industry faces in the current economic climate,” Holliday said in a statement Tuesday.

In addition to the hiring of Cozzi, the boards of directors at SL Green and Gramercy also modified agreements made four years ago when SL Green launched Gramercy. Among the changes made was a reduction in the base management fee from 1.75 percent to 1.50 percent effective Oct. 1. SL Green subsidiary GKK Manager L.L.C., will remit all CDO collateral management fees to Gramercy. There was also reduction in the termination fee due from Gramercy to SL Green if Gramercy does not renew the management agreement, which is set to expire Dec. 31, 2009.

Homepage Story Here

GM CEO Pushes for Share of Federal Bailout Pie, More Banks Line Up

By Scott Baltic, Contributing Editor

-- Those who do not study history, it's said, are condemned to repeat it, which suggests that the Big Three automakers' libraries might have gathered a thick layer of dust. It was just about 29 years ago that the legendary Lee Iacocca (remember those patterned shirts with the white collars?), then CEO of Chrysler, approached Congress to ask for about $1.5 billion in loan guarantees. Congress eventually agreed, and then-President Carter signed the legislation into law in January 1980.

The action, essentially unprecedented at the time, worked in spades. The automaker, previously on the verge of bankruptcy, introduced some successful new car models and became a leader in the introduction of the minivan. Chrysler ended up paying off its loans ahead of schedule.

We can only hope that the current version of this story turns out so well.

General Motors Corp. CEO Rick Wagoner is pushing ever harder for federal aid to the largest U.S. automaker as it seeks a merger with Chrysler, whose majority owner is Cerberus Capital Management L.P. GM has lost nearly $70 billion over the past four years, and Chrysler too is losing money.

The price tag of a bailout won’t be in 1970s dollars, though. Press reports based on sources who chose to remain anonymous indicate that the cost might hit $10 billion. Specific sources of help include a $25 billion low-interest loan fund administered by the U.S. Department of Energy that’s intended to help carmakers retool their plants, as well as--in theory--the $700 billion bailout pool that’s being tapped to aid troubled financial institutions.

Another twist is that the automakers’ lending units might be eligible to get help under the Emergency Economic Stabilization Act of 2008, according to White House press secretary Dana Perino. Cerberus Capital Management has been the majority owner of GMAC since 2006.

Meanwhile, more of the original targets of the EESA are lining up for their share of federal rescue money. According to USA Today, at least 16 regional banks will be included in the second phase of the Treasury Department’s purchases of preferred shares in financial institutions. The banks are:

* PNC Financial Services, Pittsburgh, $7.7 billion
* Capital One Financial, McLean, Va., $3.55 billion
* Regions Financial, Birmingham, Ala., $3.5 billion
* SunTrust Banks, Atlanta, $3.5 billion
* BB&T, Winston-Salem, N.C., $3.1 billion
* KeyCorp, Cleveland, $2.5 billion
* Comerica, Dallas, $2.25 billion
* State Street, Boston, $2.0 billion
* Northern Trust, Chicago, $1.5 billion
* Huntington Bancshares, Columbus, Ohio, $1.4 billion
* First Horizon National, Memphis, $866 million
* City National, Beverly Hills, Calif., $395 million
* Valley National, Wayne, N.J., $330 million
* UCBH Holdings/United Commercial Bank, San Francisco, $298 million
* Washington Federal, Seattle, $200 million
* First Niagara Financial, Lockport, N.Y., $186 million

Homepage Story Here

CBRE Realty Trust Takes U.K. Retail

By Tom Dworetzky, News Editor

-- CB Richard Ellis Realty Trust has announced the acquisition of Maskew Retail Park, a 144,400-square-foot high-quality retail center in the city of Peterborough, U.K., for $51 million, the firm reported. CBRE Realty Trust's management team worked with the acquisitions team from CBRE Investors in London to acquire the property.

 Maskew Retail Park is a recently completed development, located at Soke Parkway and Bourges Rd., the major thoroughfare north from the town center, and situated within the major retailing district of Peterborough with street frontage along Maskew Ave.  The property consists of two retail blocks and is fully leased on a long-term basis to retailers with an average remaining lease term of over 17 years.

 This is CBRE Realty Trust’s second retail acquisition in the United Kingdom. With this purchase, approximately 19 percent of the REIT’s assets have been invested in markets outside the United States.

Said Phil Kianka, CEO of CBRE Realty Trust. “We believe it (the property) complements our other U.K. holdings and is an excellent addition to our overall portfolio.”

Homepage Story Here

Historic 194,300-SF Minneapolis Office Trades, Preps for Makeover

By Barbra Murray, Contributing Editor

-- For those who can secure financing in the currently chilly lending climate, there are good deals to be had, and a joint venture involving Alex Brown Realty and Hempel Properties was able to take advantage of the real estate market's declining price tags with the acquisition of the 194,300-square-foot Rand Tower in Downtown Minneapolis.

The partners shelled out $10.2 million to acquire the 26-story office building (pictured) from Gaughan Cos., which had owned the building since purchasing it in 2004 for $11.2 million.

Carrying the address of 527 Marquette Ave. South, the Art Deco-style Rand Tower was originally developed in 1929 by Rufus R. Rand and designed by Holabird & Root Architects. ABR and Hempel plan to renovate and reposition the property.

"It's such an Icon, there's not much we can do to it, but the attraction is that it is an icon," Valerie Doleman, vice president of marketing for Hempel, told CPN. "Our plans are to be competitive to get new tenants into the building, as far as rates and brokerage cooperation." Hempel is marketing the space at $11 to $13 per square foot.

One of the newest tenants on the roster, however, didn't require any courting. Hempel will relocate from its suburban Minneapolis headquarters in Maple Grove to the building in early 2009. Presently, the Rand Tower's occupancy level is approximately 74 percent.

For Baltimore-based ABR, the purchase marks its entrée into the Twin Cities office market, where the average vacancy rate for the Minneapolis and St. Paul central business districts are 15.3 percent and 24.5 percent, respectively, according to a third quarter report by real estate services firm Colliers International. In Minneapolis, the third quarter vacancy rate marked a 1.2 percent decline from the second quarter; additionally, the market experienced positive absorption.

But for the new owners, it's not all about statistics. "Minneapolis is fairly resilient, but what's attractive about the Rand Tower is its location downtown, and it is one of the few historic properties on the National Register of Historic Places there that hasn't been converted for another use," Doleman said. "It's right in the middle of the financial district and it's a block from light rail. There's no other building like it in terms of character, access and the traffic in front of it."

According to Scott Pollock, senior vice president, investment services for NorthMarq, who represented the seller in the transaction, Rand Tower is an excellent fit for the new owner. "Hempel is an entrepreneurial, hands-on operator," he said. "They own two other properties within a block of Rand Tower, which has an excellent location in the heart of the financial district, near an abundance of amenities, and a niche in the market with limited competition. I expect Hempel to have a very positive experience with the investment.”

Homepage Story Here

Office Market Shows Continuing Weakness in Q3: Colliers

By Elena Gontar, Staff Writer

-- The nationwide office market trudged slowly through the third quarter of 2008, posting the fourth consecutive quarterly rise in vacancy, according to a report from Colliers International.  
According to the report, national office vacancies stood at 13.7 percent at the close of the quarter, back to vacancy levels last seen in Q4 2005.

This ascending trend in vacancy was reflected in both downtown (CBD) and suburban markets nationwide, with vacancy rates at 11.4 percent for downtown markets and 14.8 percent for suburban markets, Colliers said. The slowdown in demand for office space is consistent with a struggling national economy and ongoing contraction of the labor force, as the country continues to feel the effects of the credit crisis.

Downtown Class A vacancy across the United States rose slightly from 10 percent in June to 10.3 percent by the end of September. In the suburbs, Class A vacancy increased from 14.3 percent to 14.9 percent. Market polling results showed 32 of the 53 downtown markets surveyed by Colliers posted a rise in vacancy, as did 49 of the 55 suburban markets surveyed.

Net absorption was negative for the third consecutive quarter, registering negative 2.24 million square feet. Most of the space was returned in downtown markets, which gave back 2.63 million square feet collectively. The suburban Class A markets, however, which saw 4.25 million square feet of positive absorption, was the strongest demand for office space.  

Consistent with the last several quarters, new construction measured 19 million square feet of newly completed office space nationwide. And more than 90 percent of the new supply appeared in suburban markets.  

Asking rents showed a slight softening during the third quarter, with downtown Class A lease rates off their Q2 average by 1.4 percent, clocking in this quarter at $49.39 per square foot. However, this registers 1.7 percent higher than what was reported at the outset of 2008. Suburban Class A rents averaged $28.44 per square foot, down 1.0 percent for the quarter, and down 0.8 since the beginning of the year.

The third quarter also saw an increase in subleased space. Office space that was available on a sublease basis increased four percent during the July through September period, and 13.4 percent year-over-year. There is currently 65.7 million square feet of space available for sublease on the market. This trend of companies subleasing their office space points toward economic weakness and can also be viewed as a negative harbinger of lease rates, according to the Colliers report. The current level of sublease space, however, is well below the peak seen during Q4’02--when sublease space totaled 142.9 million square feet.

“As the fourth quarter begins, we find ourselves bracing for what could be a fairly substantial recession,” Ross Moore, executive vice president & director of market and economic research at Colliers International, said in a release. “However, there are a number of reasons why it could also be relatively short.  Recent actions taken by policymakers have been unprecedented--and the efficacy of these extraordinary steps will only become clear in future quarters."

Homepage Story Here

Mass Layoffs Breed Office Sublease Space

By Paul Rosta, Senior Associate Editor

-- Look for a steady climb in sublease space next year as the recession hits the nation’s office market in a big way. That is a major prediction made by several third-quarter reports on the national office market released last week.

The studies coincided with new estimates placing job losses in the financial sector alone at more than 200,000 by the end of the year. Such reductions may take many quarters to show up in vacancy figures, given the lead time required for tenants to assess their space needs, shrink the work force and vacate space.

Sublease space increased in three quarters of the office markets tracked by Jones Lang LaSallle Inc. “Given the speed at which the financial crisis has impacted companies, and the uncertainty surrounding the size, shape and duration of this downturn, most (tenants) have simply not adjusted space needs yet,” said the firm’s third-quarter office market report. “We therefore expect sublease space to increase more dramatically in the coming quarters but peak below the levels seen the dot com bust earlier in the decade.”

Available sublease space increased 4 percent nationwide during the third quarter alone and shot up 13.4 percent year-over-year compared to the third quarter of 2007, according to Colliers International’s third-quarter office report. “This trend of companies subleasing their office space points toward economic weakness and can also be viewed as a negative harbinger of lease rates,” the report noted. Still, the 65.7 million square feet available for sublease is less than half the 142.9 million square feet that was on the market in the third quarter of 2002, the year following the terrorist attacks on New York City and Washington, D.C.

More than a dozen office markets experienced an uptick in sublease space of more than 50 percent compared to third-quarter 2007 results, Colliers found. Leading the list are Miami/Dade County, Fla., (up 218 percent), Baltimore (182.4 percent); Greenville, S.C. (170.3 percent), West Palm Beach/Palm Beach County, Fla. (154.6 percent); Boise (153.8 percent), Downtown Manhattan (114.4 percent), and Portland, Ore. (93.5 percent).

Nationwide, sublease space is also taking a bigger share of vacancy. Real estate services firm CB Richard Ellis Inc. estimated that sublease space accounted for 11.2 percent of all vacant space, an increase from 10.9 percent from the second quarter. The firms offer varying estimates of vacancy, but last week’s reports all detect a significant increase. Vacancy for the entire U.S. market is up to 14.1 percent, a 90 basis-point jump since the beginning of the year, according to CB Richard Ellis. That is lower than the 14.6 percent vacancy rate reported by Jones Lang LaSalle but slightly higher than the 13.7 percent determined by Colliers.

Homepage Story Here